The Los Angeles area is home to a vast, fast-growing underground economy, employing almost 680,000, that threatens the region with a "downward spiral", according to a study just published.

The Milken Institute, hired by the city to find practical ways to bolster the economy, said people employed in cash-only occupations had risen 5 per cent since 2000 and now accounted for 15 per cent of the total workforce.